IRS Releases The IRS Instruction Manual

Are you facing a lot of different tax questions this year?

IRS experts have pulled together an overview of common tax issues in one convenient place — Publication 17, Your Federal Income Tax. This publication, available on the IRS.gov, contains helpful information for individual taxpayers.

This year for the first time, the IRS will issue a Spanish language version of this popular publication.

The on-line version of Publication 17 contains electronic links that make finding your answer simple.  Both the downloadable PDF and on-line 2008 Publication 17 have over 900 hyperlinks.  These hyperlinks allow users to immediately go to other parts of the publication, reducing searches to just a few clicks.

From stock sales to student loans, this nearly 300-page publication holds the answers to many of your questions:

  • Need help with a Roth IRA? Try Chapter 17 for Individual Retirement Arrangements.
  • Do you have a new child in the house? See Chapter 34 for the Child Tax Credit.
  • Are you selling stock for the first time? Check Chapter 16 for reporting capital gains. If you’re unloading losers, reporting capital losses is there, too.
  • Do you need to report the profit on your home sale? See Chapter 15 for some good news. Generally, if you qualify you only need to report the sale of your home if your gain is more than $250,000 ($500,000 if married filing a joint return).

And the best part about Publication 17? It’s free. To get a copy, visit the IRS Web site at IRS.gov or call 800-TAX-FORM (800-829-3676).

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Make sure to get your tax forms in order this year.
Make sure to get your tax forms in order this year.

Four Tips to Help Taxpayers Avoid Errors On the Recovery Rebate Credit

Most taxpayers who received the economic stimulus payment last year will not be able to claim the Recovery Rebate Credit on their 2008 federal income tax returns. A small number of taxpayers who did not receive the full economic stimulus payment last year may be eligible to claim the Recovery Rebate Credit on their 2008 federal income tax return. Figuring the Recovery Rebate Credit incorrectly or entering inaccurate information will delay the processing of your tax return and any refund due.

Below are the four things every taxpayer should know about this one-time credit, which is related to last year’s Economic Stimulus Payment:

1. You do not have to pay back your Stimulus Payment and the payment is not taxable.

2. Less than an estimated 3 percent of taxpayers are eligible. The vast majority of taxpayers are not eligible to receive the Recovery Rebate Credit.

3. Did you have a major life change? If so, you may be eligible to claim the Recovery Rebate Credit. Some of the major factors that could qualify you for the Recovery Rebate Credit include:

  • Your financial situation changed dramatically from 2007 to 2008.
  • You did not file a 2007 tax return.
  • Your family gained an additional qualifying child in 2008.
  • You were claimed as a dependent on someone else’s return in 2007, but cannot be claimed as dependent by someone else in 2008.

4. Any Recovery Rebate Credit amount will be included in your refund. The IRS will figure the credit for you and include it in your refund or put it toward any taxes owed.

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Tax Tips for Newlywed Taxpayers and Divorced Taxpayers

If you were married or divorced recently, there are a couple of things you’ll want to do to ensure the name on your tax return matches the name registered with the Social Security Administration.

There may be special tax rules if you are a newlywed couple.
There may be special tax rules if you are a newlywed couple.

If a taxpayer takes their spouse’s last name or if both spouses hyphenate their last names, they may run into complications if they don’t notify the SSA. If the newlyweds file a tax return using their new last names, IRS computers would not be able to match the new name with their Social Security Number.

After a divorce, taxpayers who change back to their previous last name also need to notify the SSA of the change.

Informing the SSA of a name change is quite simple. File a Form SS-5 at your local SSA office. The form is available on SSA’s Web site at www.socialsecurity.gov, by calling 800-772-1213 or at local offices. It usually takes about two weeks to have the change verified.

Taxpayers who adopt their spouse’s child after getting married will want to make sure the children have an SSN. Taxpayers must provide SSNs for each dependent claimed on a tax return. For adopted children without SSNs, the parents can apply for an Adoption Taxpayer Identification Number – or ATIN – by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions with the IRS. The ATIN is a temporary number used in place of an SSN on the tax return. The W-7A is available on the IRS Web site, IRS.gov, or by calling 800-TAX-FORM (800-829-3676).

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